Cotton prices on the rise
Cotton prices have shot up seven per cent in about one week.
KARACHI:
Cotton prices have shot up seven per cent in about one week, propelled by talk that India has stopped export of the fibre to Pakistan.
On Thursday, the price of cotton rose to Rs6,850 per maund (37.32 kilogrammes) compared with Rs6,400 on September 7. This season, farmers may not be able to meet the production target of 14.11 million bales, prompting the need for imports.
Widespread floods across the country, caused by torrential rains over the Indus River, have damaged cotton crops in Sindh and Punjab, sparking fears of a shortfall. According to estimates, the harvest will be around 12 million bales, approximately two million bales short of the target.
“Local cotton importers had contracted the import of 550,000 bales from India, but reports say that Delhi has stopped exports to Pakistan,” said Shakil Ahmed, a cotton dealer.
India is expected to harvest a bumper crop of 32 million bales this season and there are hopes that Pakistan will go for imports from Delhi given the price advantage.
Ahmed highlighted that Indian dealers have been constantly increasing prices of cotton and now they are demanding 98 cents per pound. Earlier, they were selling cotton for 78 cents.
For the new crop that will be harvested in November and December, Indian exporters are demanding even more: $1.05 per pound.
“This has created some panic in the market which was otherwise calm when seen in the domestic perspective,” said Ahmed.
Cotton imports from India cost Rs9,300 per maund compared with domestic market prices of Rs6,850 at present, he added.
In the domestic market, the supply of cotton is smooth with Sindh expected to come out with a good harvest. “Supply of Punjab’s early crop to the market has ended and now the next phase will begin in 10 days. Besides, supplies in Sindh are uninterrupted.”
The US, the largest producer of cotton in the world, has sold 90 per cent of its crop and has nothing significant to offer to Pakistan, according to Ahmed.
He brushed aside fears of a crop shortfall, saying Bacillus thuringiensis cotton, more popularly known as ‘Bt cotton’, is being cultivated on a large scale and will offset any loss caused by the floods.
Bt cotton gives an output of 15 maunds per acre compared to seven maunds given by traditional ‘Niab’ variety of Sindh.
In Punjab, cotton has been sown on 6.35 million acres while in Sindh the crop covers an area of 1.75 million acres this season. Bt cotton has been sown on 80 to 90 per cent of the cultivated area.
Published in The Express Tribune, September 17th, 2010.
Cotton prices have shot up seven per cent in about one week, propelled by talk that India has stopped export of the fibre to Pakistan.
On Thursday, the price of cotton rose to Rs6,850 per maund (37.32 kilogrammes) compared with Rs6,400 on September 7. This season, farmers may not be able to meet the production target of 14.11 million bales, prompting the need for imports.
Widespread floods across the country, caused by torrential rains over the Indus River, have damaged cotton crops in Sindh and Punjab, sparking fears of a shortfall. According to estimates, the harvest will be around 12 million bales, approximately two million bales short of the target.
“Local cotton importers had contracted the import of 550,000 bales from India, but reports say that Delhi has stopped exports to Pakistan,” said Shakil Ahmed, a cotton dealer.
India is expected to harvest a bumper crop of 32 million bales this season and there are hopes that Pakistan will go for imports from Delhi given the price advantage.
Ahmed highlighted that Indian dealers have been constantly increasing prices of cotton and now they are demanding 98 cents per pound. Earlier, they were selling cotton for 78 cents.
For the new crop that will be harvested in November and December, Indian exporters are demanding even more: $1.05 per pound.
“This has created some panic in the market which was otherwise calm when seen in the domestic perspective,” said Ahmed.
Cotton imports from India cost Rs9,300 per maund compared with domestic market prices of Rs6,850 at present, he added.
In the domestic market, the supply of cotton is smooth with Sindh expected to come out with a good harvest. “Supply of Punjab’s early crop to the market has ended and now the next phase will begin in 10 days. Besides, supplies in Sindh are uninterrupted.”
The US, the largest producer of cotton in the world, has sold 90 per cent of its crop and has nothing significant to offer to Pakistan, according to Ahmed.
He brushed aside fears of a crop shortfall, saying Bacillus thuringiensis cotton, more popularly known as ‘Bt cotton’, is being cultivated on a large scale and will offset any loss caused by the floods.
Bt cotton gives an output of 15 maunds per acre compared to seven maunds given by traditional ‘Niab’ variety of Sindh.
In Punjab, cotton has been sown on 6.35 million acres while in Sindh the crop covers an area of 1.75 million acres this season. Bt cotton has been sown on 80 to 90 per cent of the cultivated area.
Published in The Express Tribune, September 17th, 2010.